After learning a successful trading strategy, a new trader can find it difficult to decide when to move on to live to trade. Demo accounts are too often used to compare themselves to others, leading traders to spend too much or too little time on these accounts. Before you start trading live funds, you should have the following information.
1. Trading with the broker & their platform feels comfortable to you.
Before opening a live Forex account and investing your hard-earned money in trades, make sure you know your trading platform well. Do you find it frustrating to realize that you can’t exit a trade at the very moment you’re preparing to do so?
Most experienced Forex traders use demo accounts to evaluate and evaluate a broker’s reliability before depositing their funds. In addition to opening a demo account with your proposed broker is also a good idea to open a live account with them.
Before setting orders, you must be aware of slippage and the broker’s usual pip spread (trading costs). You must understand the analysis tools and the deposit and withdrawal options.
2. You have consistently made money on your demo account.
Forex trading on live accounts isn’t recommended if you’re not consistently winning on your demo account. The goal is to make 70 percent of your trades profitable when demoing. It might be just 60%.
The goal of trading should not be to get rich quickly but to make a profit on a long-term basis. Traders on demo accounts shouldn’t be too hard on themselves if they don’t make consistent profits. You should instead focus on identifying high-probability setups with a reasonable reward-to-risk ratio that will minimize your losses and maximize your profits.
3. It is important to have a well-defined trading plan.
You are dealing with real money and trades when trading with a live Forex account. Thus, before changing, consider your trading strategy carefully, so you don’t mess it up. You must develop a trading plan for your demo account.
Adapting your strategy to live trades will become easier as you gain more experience. For it to work consistently, you will need to know how to tweak it.
You can try out different strategies with a demo account and adjust them until you find a strategy that works. You can move on to live to trade as soon as you feel comfortable with your trading strategy and understand the indicators and analysis tools.
4. You have clear-cut risk management strategies.
In Forex trading, your success depends 50% on your ability to develop profitable strategies. It is also important to have an effective risk management strategy for the other 50%. When switching from a demo to a live Forex trading account, a well-thought-out set of risk management rules is also essential.
There are times when the Forex market can go crazy, leaving you doubting your analysis and trading abilities. Do not forget that the forex market is prone to volatility. You may only be able to protect yourself if you follow your risk management plan during these difficult times.
5. You have a clear trading style.
It is easier to decide what kind of trader you would like to be by trading with a demo account before switching to a live account. The four most common trading strategies adopted by traders are as follows: The four most common trading strategies adopted by traders are as follows:
Day trading
Buying and selling currencies within a single trading day. Forex day trading might be an ideal career path if you are among the thousands of traders seeking to take on the bull by the horns and earn a living.
Scalping
Trading scales is a strategy in which positions are entered and exited within seconds or minutes.
Swing trading
Beginners should consider a swing trading strategy when it comes to trading Forex. Swing trading is a medium-term trading method used by Forex traders to take advantage of price swings.
Position trading
Long-term trading is a type of trading that allows traders to keep their positions open for a long period. Positional trading is about maintaining a position for a few days, weeks, or months depending on your objectives.
Bottom line
At first, trading on a live account can seem overwhelming. However, preparing yourself through demo trading can significantly impact and keep you at the top of your game.
